Fixed price project work from April 2020?

[quantum77]

In the past I've always charges a daily rate to clients. Post April 2020 could I package up work and charge a per project price to get around IR35?

[northernladuk]

You could but its not likely to work. Its how the client wants to pay you, not the other way around.

Fixed price is the way to go but you are going to have to do battle with your clients processes to somehow get your fixed price in. That is going to be a bit of a mountain to climb.

Sound them out first to see if it's even an option.

[ladymuck]

I have only had one fixed price gig. It was just a short term, part time piece of work and it had very clear deliverables. I invoiced in three equal instalments at intervals defined in the contract.

It works fine if the client is clued up to that approach and there's a means of evidencing the deliverables needed to release payment.

[jamesbrown]

I have only had one fixed price gig. It was just a short term, part time piece of work and it had very clear deliverables. I invoiced in three equal instalments at intervals defined in the contract.

It works fine if the client is clued up to that approach and there's a means of evidencing the deliverables needed to release payment.

Right. The risk (probability even) is that it’s perceived as a workaround or quick fix and ends up being a total disaster for all concerned. I don’t think most people appreciate the fundamental difference between T&M and fixed price work. You can’t really package T&M work as fixed price without a fundamental rethink. Both the client and the contractor must have a very good view of deliverables, some skill in estimating, clarity on acceptance criteria and be clear about what happens when changes are required.

[ladymuck]

Right. The risk (probability even) is that it’s perceived as a workaround or quick fix and ends up being a total disaster for all concerned. I don’t think most people appreciate the fundamental difference between T&M and fixed price work. You can’t really package T&M work as fixed price without a fundamental rethink. Both the client and the contractor must have a very good view of deliverables, some skill in estimating, clarity on acceptance criteria and be clear about what happens when changes are required.

Absolutely agree.

It's an approach I wouldn't have taken if it wasn't for the fact the person leading the project was an ex-colleague from a previous client who I trusted. They had a very clear idea of what they wanted me to do and what was a reasonable delivery time frame. If it had been an unknown client, I would have been more wary.

Now I've done it, I am more willing to work that way again as it was an excellent learning experience.

[jamesbrown]

Absolutely agree.

It's an approach I wouldn't have taken if it wasn't for the fact the person leading the project was an ex-colleague from a previous client who I trusted. They had a very clear idea of what they wanted me to do and what was a reasonable delivery time frame. If it had been an unknown client, I would have been more wary.

Now I've done it, I am more willing to work that way again as it was an excellent learning experience.

Yeah, it's great when it's properly thought through and it's built on some experience and trust. I do it when I can, but I've had a couple of disasters and few situations where I've massively over-estimated and come out ahead. One way to mitigate the risk is to break it into two stages, scoping and delivery. The scoping stage could be T&M or fixed price.

Where it's absolutely guaranteed to fail, I think, is when both parties are looking for a workaround to IR35.

[WordIsBond]

Where it's absolutely guaranteed to fail, I think, is when both parties are looking for a workaround to IR35.

I'd not entirely agree. When I left my permie job I had a contract with my old employer that I operated inside IR35, but also did several fixed price jobs for them specifically to get those projects clearly outside IR35.

Worked well for both of us. They knew exactly what to budget for those jobs. There was a risk but because I was bidding on a series of small projects, it mitigated the risk that I'd mess up one of them. I did underbid, I only came out about 10% ahead on those projects compared to T&M. Tried to bid it at a 25% premium to give myself cover. Still, extra profit, even if only 10%.

[jamesbrown]

I'd not entirely agree. When I left my permie job I had a contract with my old employer that I operated inside IR35, but also did several fixed price jobs for them specifically to get those projects clearly outside IR35.

I partly say that for others reading (such as the OP) who might be thinking that it's a quick fix when it isn't. Perhaps there are exceptions where it starts a legitimate conversation with the client about an unambiguously B2B contract, but many clients want T&M because they aren't willing to concede the level of control over when/where/how or put in the groundwork for estimating what. The likelihood is that both parties wants BoS work and persist their T&M mindset even if the contract says differently, i.e. the contract and working practices are not aligned because, for example, the client wouldn't really accept the deliverables being finished in half the time and the contractor wouldn't really accept spending twice the time they estimated. Also, in that situation, it's a complete sham and of no value w/r to IR35.

[quantum77]

Thanks for all of the great input!

I've worked with this client in the past so I'm fairly comfortable in estimating/bidding at a fixed price with them. As others have said I may bid under/over and one side will "win", but I'll take that over jumping into a permie role elsewhere. At least until the April 2020 dust settles...

I assume I should negotiate this asap as it's extremely unlikely the March budget will delay the apocalypse?

[jamesbrown]

Yes, the announcement of the review effectively confirmed it as going ahead.